grollos, page-5

Grollos take $22m hit

Fiona Cameron | April 03, 2008

MELBOURNE's Grollo family has lost $22.5 million on its investment in listed company CP1, with shares in the Gold Coast-based developer slumping two-thirds in nine months.

Grocon paid $33.9 million for its 17.9 per cent CP1 shareholding last June, reflecting about 80c per unit.

The deal was fully funded by a loan from Sandkent Investments, a company associated with CP1 executive director Phil Sullivan.

Daniel Grollo, Grocon chief executive, was in Dubai yesterday, but a spokesman said Mr Grollo remained on the board of CP1 and hoped that over time it would provide a pipeline of development projects in Queensland.

On the diminished CP1 share price, she said: "Hopefully, it will pick up."

CP1 shares hit a 16c low last month, but have recovered a little since and yesterday surged more than 17 per cent -- up 4c to 27c. A CP1 spokesman said yesterday's lift was in line with the market and there were no announcements pending.

At CP1's nadir last month, the Grollo shareholding sank to a paper value of less than $6.8 million.

At yesterday's price, the initial $34 million investment -- for 42.4 million shares -- was worth about $11.45 million.

Meanwhile, Mr Sullivan's Sandkent Investments this week outlaid $5.13 million to buy 1.7 million CIY shares from interests associated with director Peter Trathen.

The parties told the ASX the shares were transferred "pursuant to a share loan agreement". After the deal, Sandkent owned 6.98 million CP1 shares.

The collapse in the CP1 share price last month mirrored the fortunes of the related, but separate, listed company City Pacific Ltd.

City Pacific spent a week in a trading halt last month before announcing it had found a $100 million investor for its City Pacific First Mortgage Fund -- later revealed to be Fortress Investment Group.

Earlier this year, the US-based Fortress emerged as the company behind a $150 million loan to another embattled Gold Coast group, MFS.

Last October, CP1 announced chief executive Phil Sullivan would step down but continue as an executive director. No appointment has yet been made to the CEO's position.